Tankless water heating: a market propane should own

February 26, 2019 By    

For several decades, the gas grill – and particularly the portable propane gas grill – has been at the forefront of backyard grill purchases in America.

With hydronic heating, tankless water heater installations will also serve as a backup space-heating source in homes. Photo courtesy of the Propane Education & Research Council

Propane tankless water heaters have the opportunity to disrupt the market. Photo courtesy of the Propane Education & Research Council

Even with stiff competition from the old standby charcoal grills, electric grills and even newer on-the-scene wood pellet models, gas grills still dominate the marketplace. According to a recent survey by the Hearth, Patio & Barbecue Association, gas is the most popular grill type (64 percent), followed by charcoal, and to a lesser degree, electric and wood pellet models. While a specific breakdown is not offered, an overwhelming number of those gas grills are portable models fueled by propane rather than by natural gas.

Propane gas grills started to rise in popularity back in the 1970s when brands like Broilmaster and Charmglow introduced high-performance gas grills that offered convenience and barbecue flavor, with the portability of a propane fuel source. The propane industry embraced gas grills, and sales accelerated through propane retailers, specialty retailers and eventually big box stores.

Propane grills flooding into backyards eventually spawned specialty propane retailers like Blue Rhino to provide convenient grill tank exchange. Today, seven in 10 Americans own a grill or smoker and the vast majority of those are portable propane models. We still own that market, even though we no longer have direct control over the majority of those grill sales. Propane grills continue to be the right product for the year-round lifestyle demands of consumers.

Now, let’s compare the gas grill market to the water heater market. About 9 million water heaters were sold in the U.S. last year, with a little over half of those sales being gas models. A relatively small but growing percentage of the overall sales were in high-efficiency models such as gas tankless, gas storage tank and electric heat pump models. Solar and solar hybrid models are also playing a small but growing role in high-efficiency water heating in some parts of the country.

The tankless water heater portion of the market was about 6 percent last year and enjoying over 5 percent compound annual growth. Propane tankless water heaters are a significant part of annual tankless sales, with one of the major tankless manufacturers reporting 25 percent of its sales being propane models versus natural gas.

Gas tankless water heaters are popular for today’s consumers because of their low space utilization, high energy efficiency and superior service life over storage tank models.

Just like charcoal grills back in the 1970s, the Propane Education & Research Council estimates, there are over 4 million electric water heaters and aging gas storage tank water heaters in homes located in propane country that are vulnerable to the market disruption offered by propane tankless water heaters.

The three main opportunities for water heater sales are new construction, emergency replacement and upgrades for increased energy efficiency. These opportunities exist in both the residential and commercial markets. Propane retailers and tankless water heaters can play an important role in all three areas.

Propane tankless water heaters are the right product for the lifestyle demands of today’s consumer, just like gas grills. It is time that you and the rest of the propane industry embrace tankless water heaters – and maybe a plumber or two along the way. We can own that market.

Tom Jaenicke is vice president of propane marketing services for Warm Thoughts Communications.

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